I have reconstructed in vitro the developmental program of differential class III gene expression in Xenopus laevis. A potential molecular basis for oocyte-specific class III gene inactivation and repression has been defined. Oocyte specific class III genes (oocyte 5S RNA genes and satellite I DNA) bind transcription factors with lower affinities than do the somatic type class III genes (somatic 5S RNA genes). Stable transcription complexes are formed on somatic-type class III genes, but not on oocyte-type class III genes. The basis of stability on a somatic 5S RNA gene is the cooperative interaction of two transcription factors (TFIIIA and TFIIIC) with a 10bp region of the promoter. Limitation of transcription factors during embryogenesis, the sequestration of transcription factors or a competing protein- nucleic acid interaction such as chromatin assembly, can all cause the displacement of transcription complexes from oocyte-specific class III genes. Chromatin assembly in the presence of histone H1 leads to both the loss of oocyte-specific class III gene transcription complexes and the establishment of a repressed chromatin structure on this DNA.